Stocks are mixed on Tuesday, still reeling from a thrashing on Monday after trading back into the June top that led to a dramatic selloff, following news that California and other states will close movie theaters, bars, and restaurants in the wake of spiking number of coronavirus cases.
Some analysts like Jim Cramer see yesterday as the beginning of a rejection process that could take the market some time to recover from.
“That turnaround yesterday, the pirouette where it went back down, you don’t just snap out of that in one day,” CNBC’s Jim Cramer said on “Squawk on the Street.” “There are too many people who bought at the top who are trying to figure out, ‘Lord get me back to even.’ Let this play out. We don’t even know which group is going to come to the fore here. Will it be the companies that do better because people think a vaccine is upon us? I can’t buy into that theory but that was the theory yesterday afternoon.”
The Dow Jones Industrial Average is climbing higher early on Tuesday, assisted by shares of JPMorgan Chase, which reported stronger-than-projected quarterly results. Yet, much of the broader market continues to grapple with losses as concerns among major tech stocks mounted.
The Dow gained a little more than 1% before giving back some of the gains, while the S&P 500 is struggling to stay above 0.25% and the Nasdaq Composite is trading in the red, after a dramatic selloff that was aided by Tesla. The Dow notched its session high after Florida stated a better than expected 3.3% elevation in coronavirus cases, a number that is below a one-week average of 4.6%.
Stock index ETFs are also trading mixed along with their underlying benchmarks. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), are positive in late morning trade Friday, while the Invesco QQQ Trust (QQQ) is struggling to reach breakeven levels.
“What’s so influential about the banks reporting early in the earnings season in times like these is we’re really counting on banks’ management team’s view on what’s going on,” Susan Schmidt, head of U.S. equities at Aviva Investors, told CNBC. “Banks are the foundation of our U.S. economy. They are there to provide loans to small businesses and to manage the retail consumers’ deposits.”
Many investors have been anticipating anemic earnings result this time around, especially among banks, as the sector set aside more money to cover expected losses from the coronavirus-induced shutdowns.
“We’ve got a full three months of the pandemic coming through the numbers now,” Kyle Sanders, an analyst at Edward Jones, told Bloomberg, adding that the second quarter was probably the worst for bank earnings since the financial crisis. “The first quarter was rough, but it really only reflected a couple of weeks in March.”
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